Suspected German terror plot a false alarm

German police have found no sign of any planned attack in the flat of a 27-year-old man who was arrested, authorities say, contradicting initial reports that the suspect had been plotting a terrorist act.

The raid, which took place in Eisenhuettenstadt near the Polish border, turned up two firecrackers, police said on Wednesday.

The suspect was described as "psychologically unstable".

Earlier Wednesday, Brandenburg State Premier Dietmar Woitke said that the police raid was carried out on suspicions of an Islamist motivated attack being planned against a local festival next week in Eisenhuettenstadt.

Domestic security authorities have taken over the investigation from local police. Security officials said two fireworks devices were found in the man's home, as well as hints of "a possible affinity" with the Islamic State extremist movement.

Germany has been on high alert since two terrorist attacks carried out last month in the southern state of Bavaria were claimed by the terrorist group.